Elon Musk has announced a significant reduction in his involvement with the Trump administration’s Department of Government Efficiency (Doge) initiative following Tesla Inc.’s sharp decline in profits and revenue during the first quarter of 2025.
The electric vehicle (EV) manufacturer reported a 70% drop in profits and a 20% decrease in automotive revenue compared to the same period last year. Total revenue for the quarter fell to $19.3 billion, a 9% year-over-year decline, falling short of analysts’ expectations of $21.1 billion. Tesla also saw a 13% drop in vehicle deliveries — its lowest in three years — as the company continued aggressive price cuts to stimulate demand.
The disappointing results come amid growing scrutiny of Musk’s political ties and leadership direction. His close affiliation with former President Donald Trump’s new administration, particularly his role leading the Doge initiative — aimed at slashing federal spending and reducing government staffing — has sparked public backlash and calls for Tesla boycotts.
During a post-earnings call, Musk addressed the controversy, stating, “My time allocation to Doge will drop significantly starting next month,” limiting his government activities to “one to two days per week.” He acknowledged the criticism and its potential effect on Tesla’s brand, but defended his involvement, saying, “Getting the government house in order is mostly done.”
Despite Musk’s assurances, Tesla offered no growth guidance for the upcoming months, instead cautioning that shifting political dynamics and volatile trade policies may continue to disrupt demand and supply chains.
Tesla’s challenges were compounded by newly imposed U.S. tariffs on Chinese imports. Although Tesla assembles its vehicles domestically, many parts are sourced from China, making the company vulnerable to trade disruptions. “I’ll continue to advocate for lower tariffs rather than higher tariffs, but that’s all I can do,” Musk said. He also took aim at Trump adviser Peter Navarro, calling him a “moron” after Navarro questioned Tesla’s manufacturing credibility.
While Musk reaffirmed Tesla’s long-term focus on artificial intelligence as a growth driver, investor confidence remains cautious. Tesla shares, which have dropped 37% year-to-date, rebounded slightly — rising over 5% in after-hours trading as some investors saw the results as better than feared.
“Tesla’s problems are mounting,” said Dan Coatsworth, an investment analyst at AJ Bell. “Fierce competition, weakening demand, and political entanglements are adding significant pressure. The company now faces serious questions about its leadership priorities and future direction.”
